Correlation Between Caixa Seguridade and Cia Brasileira

Can any of the company-specific risk be diversified away by investing in both Caixa Seguridade and Cia Brasileira at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Caixa Seguridade and Cia Brasileira into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Caixa Seguridade Participaes and Cia Brasileira de, you can compare the effects of market volatilities on Caixa Seguridade and Cia Brasileira and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Caixa Seguridade with a short position of Cia Brasileira. Check out your portfolio center. Please also check ongoing floating volatility patterns of Caixa Seguridade and Cia Brasileira.

Diversification Opportunities for Caixa Seguridade and Cia Brasileira

0.17

Correlation Coefficient

Caixa Seguridade  Cia Brasileira

Average diversification

The 3 months correlation between Caixa and Cia is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Caixa Seguridade Participaes and Cia Brasileira de in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Cia Brasileira de and Caixa Seguridade is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Caixa Seguridade Participaes are associated (or correlated) with Cia Brasileira. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Cia Brasileira de has no effect on the direction of Caixa Seguridade i.e., Caixa Seguridade and Cia Brasileira go up and down completely randomly.

Pair Corralation between Caixa Seguridade and Cia Brasileira

Assuming the 90 days trading horizon Caixa Seguridade Participaes is expected to under-perform the Cia Brasileira. But the stock apears to be less risky and, when comparing its historical volatility, Caixa Seguridade Participaes is 2.17 times less risky than Cia Brasileira. The stock trades about -0.05 of its potential returns per unit of risk. The Cia Brasileira de is currently generating about 0.15 of returns per unit of risk over similar time horizon. If you would invest  475.00  in Cia Brasileira de on October 23, 2024 and sell it today you would earn a total of  35.00  from holding Cia Brasileira de or generate 7.37% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	94.44%
Values	Daily Returns

Caixa Seguridade Participaes  vs.  Cia Brasileira de

Caixa Seguridade Par

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Caixa Seguridade Participaes are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Caixa Seguridade is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Cia Brasileira de

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cia Brasileira de has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of latest weak performance, the Stock's basic indicators remain stable and the newest uproar on Wall Street may also be a sign of mid-term gains for the firm private investors.

Pair Trading with Caixa Seguridade and Cia Brasileira

The main advantage of trading using opposite Caixa Seguridade and Cia Brasileira positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Caixa Seguridade position performs unexpectedly, Cia Brasileira can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Cia Brasileira will offset losses from the drop in Cia Brasileira's long position.

The idea behind Caixa Seguridade Participaes and Cia Brasileira de pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Premium Stories module to follow Macroaxis premium stories from verified contributors across different equity types, categories and coverage scope.